Venezuelan Government Announces Petroleum-Backed Cryptocurrency

Nathaniel Yerby, Lawrence J. Chastang Global Fellow

February 22, 2018

On Tuesday, the government of Venezuela launched a presale of the petro, a cryptocurrency backed by the country’s petroleum assets. The government set the opening price of each petro at $60, making the petro the first cryptocurrency to be publicly issued and controlled (El País). The government has set aside five million barrels of petroleum to support the petro and suggested that all Organization of Petroleum Exporting Countries (OPEC) member-states adopt a cryptocurrency tethered to oil. The US Treasury warned American investors that buying the petro may constitute a violation of US sanctions that have been imposed on the Venezuelan government (Al Jazeera).

Venezuela is currently suffering from hyperinflation and the bolívar, the country’s official currency, has lost almost all purchasing power (Reuters). Many Venezuelans do not have access to food and medicine, and the unemployment rate is projected to rise to 32% by 2022. Venezuelan President Nicolás Maduro expressed hope that the petro will help his country surmount its enormous economic challenges and become an “economic powerhouse.” Nevertheless, the Venezuelan opposition accuses Maduro of grievous economic mismanagement and authoritarianism and insists Venezuela will not recover while he remains in power (CNBC).